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Commercial
success brought complications, however; throughout the history of his motion
picture company, Thomas Edison was frequently involved in litigation over patent
claims. Suing the competition for patent infringement was a way of protecting
his inventions and profits and a way to eliminate competition. Companies such as
Lubin, Selig, Vitagraph, and Essanay all found themselves in court over Edison's
claims. One of Edison's biggest wins came in July 1901 when a U.S. Circuit Court
in New York ruled that Biograph, one of Edison's biggest competitors, had
infringed on Edison patent claims. The decision was reversed in March 1902 by an
appeals court.

As a result of this continuing
litigation, the Edison Company formed the Association of Edison Licensees on
March 1, 1908. The association was an attempt to bring order to the unruly
competition among film companies and to marginalize nonmember companies. It also
sought to resolve the costly legal squabbles related to the many Edison Company
lawsuits by granting licenses to producers, exchanges, and exhibitors for the
member companies. A formal release system for films was set down, along with
rules of operation for the member companies. Biograph, however, refused to join
and in retaliation formed an opposition group of licensees. When these
arrangements did not eliminate competition, an agreement was made between
Biograph and Edison to join their licensee organizations into the Motion Picture
Patents Company on December 18, 1908. This organization, which became known as
"the Trust," established interlocking agreements between the film
exchanges, theaters, and the Eastman Kodak Company, which amounted to a monopoly
on the American film market.